My Company

By Paula Aven Gladych

When lower-income workers have access to a pension plan at work, their eligibility and take-up rates are nearly equivalent to higher-income workers.

That’s one of the big takeaways in a study by researchers April Yanyuan Wu and Matthew S. Rutledge of the Center for Retirement Research at Boston College, who set out to explore the impact that a lack of a pension plan has on lower-income individuals.

Not surprisingly, they found that people who make less money have a smaller probability of working for a company that offers a pension plan than their higher-income counterparts.

As the retirement industry looks for ways to increase participation in retirement savings plans, the researchers found that policies such as automatic enrollment are unlikely to close the pension coverage gap between older, lower-income individuals and their higher-income contemporaries.

The best way to achieve greater pension participation is more jobs and, in particular, more good jobs, they concluded.

“Improving the job prospects of lower-income individuals — not only so they have more success in finding any job, but so they succeed in finding the types of jobs that offer pensions and other benefits — is likely to increase pension participation among older, lower-income individuals,” their report said.